U.S. stocks were trading lower early Tuesday morning as investors await the Federal Reserve’s expected decision to raise interest rates when the two-day FOMC meeting begins.
U.S. stocks swung between small gains and losses Monday for global markets, with investors awaiting a slew of corporate earnings reports.
The S&P 500 added 5.21 points, or 0.1%, to 3966.84. The Dow Jones Industrial Average gained 90.75 points, or 0.3%, to 31990.04. The tech-heavy Nasdaq Composite Index lost 51.45 points, or 0.4% to 11782.67. So far investors have largely brushed off disappointing earnings.
Shares of S&P 500 companies that missed Wall Street’s forecasts have fallen 0.2% on average in the two days before their report through the two days after, according to FactSet. That compares with the five-year average of a 2.4% decline.
The Fed gathering, the fifth policy meeting of the year, will conclude Wednesday afternoon with the rate decision, policy statement and post-meeting press conference with Fed chairman Jerome Powell.
The Fed is widely expected to raise the Federal Funds rate by three-quarters of a percentage point to a range of 2.25%-2.5%. It would be the central bank’s second consecutive 75-basis point rate hike (June saw the first 75 bps hike since November 1994), following a half-point hike in May and a quarter-point increase in March. Previously, the Funds rate had been in a 0%-0.25% range following two emergency rate cuts in March 2020 in response to the global pandemic.
Tuesday will also bring a flurry of economic reports, kicking off with May home prices. That will be followed by the Census Bureau report expected to say sales of new single-family homes fell 5.2% in June to a seasonally adjusted annual rate of 660,000. That would be the fifth decline in six months as higher mortgage rates and record-high prices shut many homebuyers out of the market. For context, April’s reading of 629,000 was the lowest in two years.
Lastly, the Conference Board will release its consumer confidence index for July. It’s expected to fall a point and a half, the third straight monthly decline, to 97.2, the lowest since February 2021. Confidence is down sharply from a post-pandemic high of 128.9 in June of last year on inflation concerns.
Meanwhile, Asian stock markets were mostly higher Tuesday as investors braced for the Fed’s hike to cool inflation.
Shanghai, Hong Kong and Seoul advanced. Tokyo edged lower. The Shanghai Composite Index rose 0.8% to 3,276.71 while the Nikkei 225 in Tokyo shed less than 0.1% to 27,680.41. The Hang Seng in Hong Kong gained 1.5% to 20,868.29.
The Kospi in Seoul added 0.2% to 2,408.60 after the government reported the South Korean economy grew by a stronger-than-expected 0.7% over the previous quarter in the three months ending in June.
Sydney’s S&P-ASX 200 was 0.1% higher at 6,798.00. India’s Sensex opened down 0.7% at 55,365.32. New Zealand retreated while Southeast Asian markets gained.